RD417 - The Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2015 Reporting Period

Executive Summary:
Section 38.2-3419.1 of the Code of Virginia requires every insurer, health services plan, and health maintenance organization (HMO) from which a report is deemed necessary under regulations adopted by the State Corporation Commission (Commission) to report to the Commission cost and utilization information for each of the mandated benefits and mandated providers contained in §§ 38.2-3408 through 38.2-3419, and § 38.2-4221 of the Code of Virginia. The Commission's Rules Governing the Reporting of Cost and Utilization Data Relating to Mandated Benefits and Mandated Providers (the Rules) at 14 VAC 5-190-10 et seq. specify the detail and form of the information that must be reported by companies.

The Rules establish requirements applicable to the reporting of claim and premium data specific to each benefit and provider category contained in §§ 38.2-3408 through 38.2-3419, and § 38.2-4221 of the Code of Virginia. Data regarding self-funded plans and policies issued in other states which provide coverage to residents of Virginia is not represented in this report because such plans and policies are generally not subject to the mandated benefit and mandated provider requirements of Virginia. Companies are required to submit their reports no later than May 1 of the year following the reporting period. The Commission is required to submit its report for submission to the Governor and the General Assembly by October 31 of each year. This report provides information relating to the 2015 reporting period. Previous reports are listed in Appendix A

Virginia law requires a company to file an annual cost and utilization report on mandated benefits and providers if the company has annual written premiums of $500,000 or more for products subject to mandated benefit and provider requirements. Of the 746 companies licensed to issue accident and sickness or subscription contracts in Virginia or licensed as HMOs in Virginia in 2015, only 28 companies met this requirement and, accordingly, submitted data for products which are subject to mandated benefit and provider requirements for the 2015 reporting period. Those companies not required to file a full report pursuant to the Rules at 14 VAC5-190-10 et seq. wrote $500,000 or more of accident and sickness insurance premiums, but less than $500,000 in premiums on policies subject to mandates, and were thus required to file abbreviated reports. There were 167 companies meeting this criterion. Those companies not required to file either a full or abbreviated report either (i) wrote less than $500,000 of accident and sickness premiums in Virginia during calendar year 2015; or (ii) did not issue any policies subject to §§ 38.2-3408 through 38.2-3419, or § 38.2-4221 of the Code of Virginia during 2015.

Information presented in this report reflects data provided by 18 insurers and 10 HMOs. This report reflects the data of 2 companies that issued only individual contracts, 8 companies that issued group certificates or subscription contracts, and 8 companies that issued both individual contracts and group certificates or subscription contracts in Virginia in 2015. HMOs are not subject to all of the mandated benefit requirements of Title 38.2 of the Code of Virginia; therefore, the data provided by HMOs has been analyzed separately from data provided by insurers and health services plans.

The Rules require companies to use certain procedure and diagnosis codes when developing claim information for each benefit category. Benefits have been defined in this manner in order to ensure a reasonable level of consistency among data collection methodologies employed by the various companies. The codes utilized in the preparation of this report are part of two widely accepted coding systems used by most hospitals, health care providers, and companies. These systems are outlined in the “Physicians' Current Procedural Terminology, 2014 Office Edition” (CPT-Plus procedure codes) and the “International Classification of Diseases - 9th Revision - Clinical Modification, Sixth Edition, 2014 Office Edition” (ICD-9-CM diagnosis codes).

As discussed in the 2015 report, RD337 - The Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2014 Reporting Period, the International Classification of Disease (ICD) Codes, for which cost and utilization data is reported, underwent a major update in 2015. Effective September 30, 2015, the ICD-9 codes were replaced by ICD-10 codes. The combinability of data coded under the new codes has still not been finalized. As a result, insurers were requested to report mandated benefits and utilization for the 9-month period January 1, 2015 through September 30, 2015 for benefits coded utilizing the ICD-9 codes as provided in instructions in the Bureau of Insurance's Administrative Letter 2016-01, dated March 8, 2016. Because of the uncertainty underlying combinability of data, it was determined that requesting 9 months of data would provide data both credible and comparable to previous reports until a full year of ICD-10 coded data becomes available in calendar year 2017.

This report includes summaries of each of the mandated benefit and provider requirements in Virginia, together with information relating to the impact of these requirements on cost and utilization. As in previous years, the data reported by the carriers indicates that individually, Virginia's mandated benefit and provider requirements vary greatly in their impact on health insurance premiums.

The data reported also indicates that generally there is a variation between the overall ratio of utilization of services and providers to the corresponding claim cost attributable to these services and providers. The data also suggests that utilization rates may vary considerably among benefit and provider categories. Utilization information may be helpful in assessing the utilization patterns for the various mandates and in comparing changes in utilization from one year to the next.

It is important to note that, while the statutory requirements relative to the mandated benefits, mandated offers, and mandated providers identified in this report remain in effect and applicable to health plans issued in Virginia, the requirements associated with each mandate, in many cases, also apply insofar as the benefit and coverage requirements associated with the mandates are included in the essential health benefit requirements for individual market and small group market health benefit plans pursuant to § 38.2-3451 of the Code of Virginia.